Swiss luxury exporters squeezed by US tariffs and a strong franc

Swiss exporters, including watchmakers and other premium manufacturers, have for decades relied on a strategy of adding value rather than competing on price, allowing them to absorb currency swings that would sink lower-margin competitors. The Financial Times reports that this model is now under real strain, as US tariffs combine with a strong Swiss franc to squeeze margins in a way that premium positioning alone cannot fully offset.

For the luxury watch sector in particular, the United States is one of the largest export markets, and Swiss brands have historically passed on some currency and cost pressures through price increases without losing much demand, given the inelastic nature of high-end luxury purchases. But the combination of tariffs and a franc that has strengthened against the dollar changes that calculus. Brands face a choice between compressing their own margins, raising US retail prices further and risking demand elasticity at lower price tiers, or shifting production and distribution strategies, none of which are simple given the reputational weight tied to "Swiss Made" labelling requirements.

The second-order implication is for brand positioning language itself. "Swiss Made" has functioned as a value multiplier, but if the economics behind that label become harder to sustain profitably, some brands may quietly adjust sourcing of components or reconsider where finishing and assembly happen, testing the boundaries of what "Swiss Made" rules currently allow. Watch for how major watch groups address currency and tariff exposure in upcoming results, and whether any move production steps to preserve margin without breaching Swiss-made criteria.

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